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Norwalk CFO: City has asked BoE to delay capital projects

Norwalk Chief Financial Officer Henry Dachowitz, right, at February 2020 Board of Estimate and Taxation meeting. At left is BET member Artie Kassimis, a former Board of Education member.

Updated 2:24 p.m.: Comments from Mayor Harry Rilling.

NORWALK, Conn. — Norwalk’s financial chief has advised Common Council members not to fund a new welcome center for Norwalk Public Schools this year. He also recommends saying “no” to funding the Silvermine Elementary School driveway, bathroom renovations and the cafeteria work that’s been planned. Instructional technology should also be a no, as far as Chief Financial Officer Henry Dachowitz is concerned.

Dachowitz, in his recommended capital budget, warned that Norwalk’s triple A bond rating would be jeopardized by adding more than $120 million to the City’s existing debt. The City is working to delay and spread out its projects, he said.

His recommendation for 2021-22 would authorize $22 million in additional bonding, a massive drop from the $153 million in borrowing authorized last year, which included approvals for a new Norwalk High School and new Cranbury Elementary School.

Importantly, he suggests that the City and Board of Education develop a joint plan to “work off” the $180 million worth of projects that have been authorized but not yet bonded. The City has “confirmed the necessity” of its projects and “the accuracy of their current expected costs and reimbursements while deferring them as much as we can,” he wrote. “We have had discussions with the Schools/Board of Education and they are conducting a similar review of their projects. This will become an ongoing annual review process.”

The Board requested $13.7 million in 2021-22 capital budget borrowing; Dachowitz recommends $1.5 million. That request included $7 million for a welcome center, $1.5 million for the Silver mine driveway $1.5 million for bathroom renovations, although NPS staff had originally suggested asking for $500,000 to begin bathroom renovations and hadn’t included the Silvermine driveway in this year’s budget.

Last year, the City approved $50 million for a new Norwalk High School and $45 million for Cranbury.

Norwalk Board of Education Chairman Colin Hosten did not reply to a Saturday email asking for a response.

“The Board of Education is having its’ facilities study reviewed as the previous study was deemed to be outdated,” Mayor Harry Rilling said Monday. “We will consider the capital needs of the BOE based on the current situation.  Certain projects may be delayed but there are no plans to eliminate any projects unless the new study recommends doing so.”

 

Process – with a public hearing Wednesday

Rilling said the “capital budget is still a work in progress.”

“Mr. Dachowitz’s recommendation is just that: a recommendation.  The budget must be presented to the Planning Commission, which will review and perhaps modify as they see fit.  It will then be returned to me for my final review,” Rilling wrote.

Planning Commission 2-3 DRAFT Agenda

The Commission’s capital budget public hearing on the is the next step in the process, at 6 p.m. Wednesday.

Then:

  • Dachowitz presents his recommendations personally to the Planning Commission on Thursday Feb. 11.
  • The Planning Commission transmits its recommendations to Mayor Rilling on or before Friday March 5.
  • Rilling sends his recommendations to the Board of Estimate and Taxation on or before Monday March 15.
  • The Common Council votes on or before Thursday April 15.   Expect it at the Tuesday April 13 meeting.

Recommendations, disappointment

Dachowitz’s letter went to the Common Council, the Board of Estimate and Taxation and Rilling.

In addition to the school projects mentioned above, Dachowitz recommends against borrowing money to fund improvements for Freese Park improvements and the Broad River baseball complex. But Dachowitz says yes to $225,000 for safe routes to schools, $500,000 for traffic signal enhancements and $350,000 for the intersection of West, Belden and Mott Avenues.

Some recommendations:

  • $500,000 for air conditioning in schools (NPS requested $750,000)
  • 0 for health building upgrades (the Norwalk Health Department requested $31,000)
  • $645,030 for City technology (that IT request would be fully funded under this recommendation)
  • $200,000 for City Hall repairs ($400,000 was requested)
  • $120,000 for school and park playgrounds (Recreation and Parks requested $260,000)
  • $620,000 for turf softball (that’s the entire amount requested by Recreation and Parks)
  • $500,000 for watercourse maintenance (Public Works requested $3.5 million)
  • 0 for the Broad River baseball complex (Recreation and Parks requested $2.5 million)
  • $325,000 for Calf Pasture Beach (Recreation and Parks requested $700,000)
  • 0 for Freese Park (Recreation and Parks requested $400,000)
  • 0 for ADA compliance (Human Relations and Fair Rent requested $80,000)
  • 0 for instructional technology (NPS requested $1,456,700)
  • 0 for the Norwalk Public Library ($113,000 had been requested)

FYE2022_CapitalBudget_CFO_TransmittalLetter_AJF_6_20PM

 

Norwalk Public Library Board of Trustees Chairman Alex Knopp reacted to Dachowitz’ recommendation Sunday, writing:

“In recognition of the City’s financial situation, the Library exercised great self-restraint to submit only two minimal program-related requests totaling $113,000 compared to all the other city departmental requests totaling $54,500,000! I’m disappointed that these two minor requests were not recommended because they both are merely continuations of on-going projects that were funded in prior years, including the final year of digitization of The Norwalk Hour and the technology refresh of the Main Branch auditorium to enable real-time streaming of programs. My concern is that failure to fund these projects will impair the library’s ability to provide the kind of top-notch on-line and digital services that our patrons have a right to expect during this era of social distancing. We’ll certainly be asking the Planning Commission, the Mayor and the Common Council not to neglect these very modest requests of the library.”

 

School computers, baseball, beach parking explained to Commissioners

The instructional technology request includes money to replace computers for students, now that NPS has moved to a one-to-one policy, one computer per child, Chief of Digital Learning and Development Ralph Valenzisi told the Planning Commission last week.

The yearly replacement of computers should be part of NPS’ operating budget but “in order to get this started for the first year, we do need it out of capital,” he said.

The design for a Broad River baseball complex was completed last year, Director of Recreation and Parks Nick Roberts told the Planning Commission. It’s a three field layout with concession stands, a restroom, lights and a replacement playground. While it was originally estimated to cost $2.5 million, “it’s a much bigger size and scale project” with a $5 million pricetag, he said.

Facing pushback from Planning Commission Chairwoman Frances DiMeglio, Roberts added that it would have additional parking and the third field would be for championships and tournaments. The tennis court would be eliminated in a decision made by the Parks and Rec Committee, he said.

The $700,000 requested for Calf Pasture Beach would remill and pave the parking lots at both Calf Pasture and Shady Beach, with striping to create additional resident-only parking spaces in the main lot, Roberts said.

“With the with the increased number of residents moving to the area and the buildings and everything else, we think it’s important to add additional resident parking spaces there,” he said.

 

Numbers add up to ‘delay, spread it out’

Dachowitz said the City would be unlikely to maintain its AAA rating with a debt level of more than $400 million.

Norwalk has about $28 million in bonds outstanding and $180 million in “authorized but unbonded projects,” he said, listing $108 million in school projects and $72 million in City projects.

So, $180 million has been authorized but not bonded for, but spending more than $120 million would put the AAA rating in danger, according to Dachowitz.

“The challenge has been, ‘How do we pay for all the previously authorized projects as well as the estimated $20-30MM annual capital requirements while maintaining our AAA bond rating?’” he wrote. “To avoid eliminating or cutting the budgets of projects, we decided that delaying and spreading out the projects over the coming 10 years would allow us to finish all the projects and retain our AAA rating.”

As you pay off bonds you free up about $20 million a year to spend on other projects, he said. Combining that with the $120 million limit gives you $320 million of spending, “but only if we spread out the project expenditures over a 10 year period.”

He wrote, “The City has to ensure that proper funding is made to all areas of the city – not just the schools but also the roads, law enforcement and fire departments, parks, safety and compliance with regulations, maintenance of our many buildings, water pollution control, economic development, community services, transportation and parking, etc.”

14 comments

Ct. V February 1, 2021 at 8:00 am

I understand and respect the rationale for maintaining the AAA rating, but on the other hand, interest rates right now are the lowest they have been in basically forever. Delaying projects risks keeping a top rating but locking in borrowing at much higher yields/costs for the city into the future.

Jen Stevens February 1, 2021 at 9:51 am

He can’t approve the $80K for ADA Housing compliance? I’m all for tight controls and reducing a bloated capx that will affect the AAA rating which will in turn make the cost of money increase, but seems that $80K ADA should be an imperative.

Bryan Meek February 1, 2021 at 10:41 am

I take no pleasure in watching the supermajority eat itself here.

$0 for instructional technology for BOE? Did I just imagine we relied on tech to educate 11,000 children for over 100 school days and counting? Zero?

Meanwhile $645,000 for City Hall technology, which is still closed and not delivering anywhere the services ?

Am I on candid camera?

I could go on and on here, but I guess we’ll just wait for the inevitable and unfortunate lawsuit at Silvermine, while we continue to pour money into a shut down city hall. Incredible.

Bryan Meek February 1, 2021 at 10:42 am

“The yearly replacement of computers should be part of NPS’ operating budget but “in order to get this started for the first year, we do need it out of capital,” he said.

Besides that being completely out of touch with GAAP and modern depreciation systems (which is 5 years for computer equipment), it’s a totally cynical move to cannibalize the other needed parts of the BOE’s budget.

Since the CFO has shown prior ability to micromanage the BOE’s budget, how many teachers or specialists should the city fire so he can implement his new set of accounting principles?

Patrick Cooper February 1, 2021 at 11:23 am

I no longer post here – but this is too important. Let’s see if this information (plus opinion) is published. Some context would help those who appear not to have much in the way of “financial” knowledge. The “Capital Budget” is distinct from the operating budget – in that it is “borrowed” money payed back to bond holders, at a rate consistent with the market and our rating (AAA). It’s the city “credit card”.

Like households, a city can get too enamored with their ability to use “other people’s money” to create grand proclamations – especially if you are trying to establish a legacy that will one day get your name on the sewage treatment facility.

This year – the capital budget calls for 153 Million in borrowing, of which 102 million is earmarked for the BOE. Let’s see a progression (13/14 was last year of Moccia), so you can understand what the Rilling administration is up to:

Year CapBud BOE

13/14 19.7m 2.7m
14/15 22.5m 5.5m
15/16 23.8 2.3m
16/17 29m 5.6m
17/18 120m 93m*

The 93m details: “school” (43.3m), Nathan Ely School (41.9m), and (6.5m) for a “Facilities Masterplan Capital Needs Implementation” – whatever that is?

18/19 83.8m 59.4m*

The 59.4m details: Jefferson School (23.9), Columbus School (20.7m), and another (12.8m) for “Facilities Masterplan Capital Needs Implementation” – and 94,000 for band uniforms.

19/20 52.5m 23.5m*

The 23.5m details: Jefferson School (9m), Columbus School (9m), and there it is again – (2.67m) for “Facilities Masterplan Capital Needs Implementation” – that’s 22m over 3 years to do – exactly what?

20/21 153m 102m*

The 102m details: 50.28m New Bob Duff Regional Norwalk High School (never part of the facilities plan), 45m for Cranbury, etc.

Parents – if you simply removed the out of the blue – no one planned for and no one wanted – Bob Duff vanity project – the “new NHS” from the plan – you could have everything you want. Now that’s removing politics out of the process…

So, there you have it. Total – “Debt Service” (the cost of paying for that debt) is 8.4% of the Norwalk 20/21 annual budget – that’s more than Police (6.8%) and Economic & Community Development (1.1%) combined. Think about that. And – what happens when the interest rates go up? Are all of these borrowings “fixed” – or do the bond holders have some variable protections? Read the fine print.

All told – Harry Rilling has pushed this city to spend an average of almost 70 million dollars every single year he has been mayor. To be paid for by whoever lives in Norwalk long after he is dead.

Great job, Norwalk.

Missy Conrad February 1, 2021 at 11:30 am

There is not enough $ because the military, including veterans affairs, takes most of our discretionary spending. Social security is a separate account. The former federal administration even moved $ from upgrading housing for our soldiers to building the border wall. Norwalk is a member of Mayors for Peace, endorsed since 2010 by the US Conference of Mayors. Now is the time for us at the state level to tell our federal government that we cannot run our government with the paltry sums that it returns to us. My sister in Florida just told me that in fixing up our brother’s condo, she had to pay fees for everything since there is no Florida income tax. And, we in Connecticut send more $ to the feds than Florida does. Florida has removed any mention of “sea level rise” & “climate change” from state documents & reports. Tell our Representative Jim Himes to sign on to the bill that cuts military spending 10%. It failed in the last Congress.

John O'Neill February 1, 2021 at 11:47 am

For those of us old enough to be Laurel and Hardy fans the quote “Here’s another fine mess you’ve gotten us into” seems to be apropos.
It’s a snowy Monday, so I have many thoughts and lots of time.
For starters — Whatever Henry Dachowitz is making in salary, give him a raise. Taxpayers need his brutal honesty and transparency to save us from free wheeling spenders. I’m still waiting for Henry D. T-Shirts to be made available to the public !!
Next — Those of us who’ve maxed out on our credit cards surely know the feeling are officials are feeling today. I can assure you it’s not pleasant. BUT, as they say reality bites.
Next — Does anyone find the timing of Estrella’s letter co-signed by Hosten, Adzima and Caprio interesting? It seems like they knew their credit card was being maxed out and still tried to go on their shopping spree for the un-needed Welcome Center. I credit the other Board members for not being blind to reality. Maybe they learned from those Blind Supporters of Bob Duff in September. They are still wiping egg from their faces. I find this this Welcome Center campaign disingenuous and a slap in the face of City Officials trying to keep Norwalk from financial ruin…For those who don’t believe me just do a quick research on Hamden CT finances. It CAN happen here.
Next — New Norwalk High School. I fault our elected leaders for not fully explaining how a school that doesn’t need to be built is now crowding out funds for other much needed projects. In fact I recall Greg Burnett saying not too long ago..let’s spend all the money put aside to make High School project bigger than the state funded. What kind of comment is that? This is our money, not yours. If the state is funding a smaller project than anticipated, maybe it’s time to review whether that project(High School) makes sense. Not to just spend MORE money that could be used to fix the toilets in other buildings. HOLY COW !
Note to Alex Knopp on Libray funding: I agree with you that we need to continue to fund Library programs. That said, you pushed Oak Hills to build a monstrosity of a restaurant that is failing. Too bad those funds aren’t available to fund the library items and toilets in our schools. This summer while eating a $15 Cheeseburger at Clubhouse Grille look around and contemplate how well that decision turned out.

In conclusion: I love Norwalk. I just can’t understand how some of our elected officials were ever elected. I beg people to read up on Hamden, CT as an example of what path NOT to follow. If I was running Hamden, Henry Dachowitz would be my first call this morning.

Thank You Hank.

Audrey Cozzarin February 1, 2021 at 1:19 pm

Wow. No money for ADA compliance (sad lack of respect for equity). No money for updating the health department, but funds available to upgrade city hall (hmmm). Worst, no money for the library of all things which over the years has become our de factor community center. But, plenty of funds ($620K) for toxic artificial turf? Thank goodness funds are planned for water projects and Safe Routes to School as well as key roadway intersection improvements.

Any citizens reading this, speak at the public hearing with your views. Some of these items should be on a ballot.

DryAsABone February 1, 2021 at 2:05 pm

What about all that COVID money that is going to get passed around, like party favors?
The state receeived $520.7M and $443M is supposed to go to education.
Does it all vanish into the ether? If Norwalk is anything like Stamford, the answer is YES!

Bruce Kimmel February 1, 2021 at 3:55 pm

In February and March of 2020, I wrote two columns — one straightforward, the other about an imaginary ghost town called NeverWoke — that discussed fiscal, political and demographic issues associated with the proposal to build the new Norwalk High School. I did not think the city could afford the new high school, even with the 80% state reimbursement. I also believed the project could have a devastating impact on school maintenance across the district.

It’s still hard to believe the new high school project was approved without a detailed analysis of its impact on our debt service and future operating costs. At the time of the approval, the city was already approaching or even beyond the borrowing limits needed to maintain a AAA credit rating.

When the BOE first presented its five-year facilities plan to the city, it was rejected out of hand by then finance director Bob Barron because it would require the city to radically exceed the debt benchmarks used by rating agencies. Discussions took place and the Board and City agreed to a scaled down five-year plan that would still cause the city to exceed standard fiscal benchmarks, such as per capital debt, or percent of operating budget used for debt service.

Our financial consultants and the rating agencies okayed the Board’s facilities plan, and we maintained our AAA bond rating, only after the city devised a medium-term plan to bring our debt back to acceptable levels. Nowhere in that debt reduction plan was there mention of a $50 million expenditure for a new high school. One can only speculate on how the rating agencies, going forward, will respond to future “emergency” plans crafted by the city.

It should be no surprise to anyone that we are now in a tough situation.

Really? February 1, 2021 at 5:39 pm

Really? The Norwalk High School “vanity project” that was never determined by any district assessment of capital needs and priorities, and that was never requested by the board of education, is making impossible the improvements needed in the other schools, most of which are considerably older than is NHS.

Some thoughts and predictions:

1. Whatever the amount of bonding authorized last year, this Norwalk High School project will cost more, and the state isn’t going to increase its promised contribution. In fact, we all learned that the state is going to provide LESS funding than was originally promised by Bob Duff. Moreover, there will be change orders required because of unforeseen (construction) conditions, overlooked facility needs, the architects’ planning omissions, etc. And then there will be items that the state determines it won’t reimburse. Oh, in case anyone forgot, there is still the unresolved matter of the swimming pool.
2. The term often used regarding the condition of the other schools is “deferred maintenance,” but the true term would be shameful neglect. Shameful neglect will continue for nearly all of the elementary and middle schools.
3. I, too, am shocked that technology would be removed from the capital budget proposed for the schools. There are needs for technology that go well beyond distance learning; it is used every single day in the schools. However, I fear that distance learning, which no one likes and which surely doesn’t serve students very well, may continue to be necessary if the new COVID strains can’t be controlled with current vaccines, and/or if the state can’t get the vaccines it needs to help us reach herd immunity.
4. Air conditioning the schools may seem to some to be a luxury, but anyone who has learned or taught in an environment lacking air conditioning knows that it is sometimes unbearable. It’s true that I attended schools that lacked air conditioning, but it doesn’t mean that it was good or that I was able to learn much when temperatures and New England humidity reached unbearable levels. After all, schools at one time lacked central heating, too, and no one would suggest that that is acceptable. The same people who make these decisions regarding the capital budget surely don’t work in unairconditioned environments. City Hall, in fact, is sometimes too cold.

The NHS project is a gift that Norwalk cannot afford to accept. Redeploy those funds to fix the real problems in the school system. Don’t use the funds for the monument to folly.

John O'Neill February 1, 2021 at 5:42 pm

@Bruce — Good History lesson. Somehow we need Norwalkers who are not involved in political process to understand what is going on. I don’t know how that happens, but I hope it does. I just read the other day that West Hartford politicians are doing a victory lap over issuing Pension Obligation Bonds…What the heck, that’s the ultimate banana peel over the gravesite!! You I’m sure of the fiscal disaster that is Hamden. I don’t know how to stop this speeding train, but somebody needs to do something. This is Crazyland.

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